Sunday, January 31, 2016

Juliet Chung and Carolyn Cui — Hedge Funds Versus Nascent (Communist) Superpower

Some of the biggest names in the hedge-fund industry are piling up bets against China’s currency, setting up a showdown between Wall Street and the leaders of the world’s second-largest economy.
Kyle Bass’s Hayman Capital Management has sold off the bulk of its investments in stocks, commodities and bonds so it can focus on shorting Asian currencies, including the yuan and the Hong Kong dollar.
It is the biggest concentrated wager that the Dallas-based firm has made since its profitable bet years ago against the U.S. housing market. About 85% of Hayman Capital’s portfolio is now invested in trades that are expected to pay off if the yuan and Hong Kong dollar depreciate over the next three years—a bet with billions of dollars on the line, including borrowed money.… 
Across the Curve
Hedge Funds Versus Nascent (Communist) Superpower
Via the WSJ:
By Juliet Chung and Carolyn Cui

6 comments:

Matt Franko said...

I find it hard to see China's terms of trade actually falling from here... seems pretty LOW already...

Matt Franko said...

Are these guys saying if China floats the yuan that the result would be their firms would price their output EVEN LOWER in USD terms? They are already pretty low imo....

Tom Hickey said...

I find it hard to see China's terms of trade actually falling from here... seems pretty LOW already...

They have been waring that the market price is going to drop and check in the domestic Chinese markets before you call it dumping (message to US). They are probably pissed about the US going after then with TPP.

A fall in the yuan on top of that would inflict some serious hurt unless other countries go back on the mantra of free trade and adopt protectionism.

Matt Franko said...

So it will go down to 2 rations of dog brain soup for their workers instead of the current 3 Tom?

I dont know about that...

Although it depends on just how much USD zombification is going on there... they may panic if the peg is removed and just become so zealous for more USDs that they lower their terms even more I suppose it could happen...

Matt Franko said...

Tom they just fucked over their own people with a price floor on oil over there implementing a policy to support more monopoly rents... so I dont want to hear about "check the Chinese markets!" ... they set their own prices domestically... they dump their surplus product on us for just above free and then take these USD crumbs back to their CB who gives them 6.5 yuan for them...

Tom Hickey said...

This is the reason for the Big Mac index. Pricing is very different globally.

The prices in the US are way above what the are in many places. Some of my friends and acquaintances made and are making a lot of munnie importing. Some of them realized this as international travelers in their hippie days, when they brought back some stuff to finance their stays abroad. For some that led to bringing in multiple units of 40' containers.

But that is now coming under increasing competition with foreign sellers operating in the US and American becoming accustomed to buying internationally.